Intrinsic value of Air Products&Chemicals - APD

Previous Close

$154.22

  Intrinsic Value

$67.87

stock screener

  Rating & Target

str. sell

-56%

Previous close

$154.22

 
Intrinsic value

$67.87

 
Up/down potential

-56%

 
Rating

str. sell

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of APD stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 33.6

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  -3.75
  10.80
  10.22
  9.70
  9.23
  8.81
  8.42
  8.08
  7.77
  7.50
  7.25
  7.02
  6.82
  6.64
  6.47
  6.33
  6.19
  6.07
  5.97
  5.87
  5.78
  5.71
  5.63
  5.57
  5.51
  5.46
  5.42
  5.37
  5.34
  5.30
  5.27
Revenue, $m
  9,524
  10,553
  11,631
  12,759
  13,936
  15,164
  16,441
  17,770
  19,151
  20,587
  22,079
  23,630
  25,241
  26,917
  28,659
  30,473
  32,360
  34,326
  36,374
  38,510
  40,737
  43,061
  45,487
  48,021
  50,669
  53,437
  56,332
  59,359
  62,527
  65,844
  69,316
Variable operating expenses, $m
 
  8,739
  9,623
  10,549
  11,514
  12,521
  13,568
  14,658
  15,791
  16,969
  18,192
  19,379
  20,701
  22,075
  23,504
  24,991
  26,539
  28,152
  29,832
  31,583
  33,409
  35,315
  37,305
  39,384
  41,555
  43,825
  46,199
  48,682
  51,280
  54,000
  56,848
Fixed operating expenses, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  7,425
  8,739
  9,623
  10,549
  11,514
  12,521
  13,568
  14,658
  15,791
  16,969
  18,192
  19,379
  20,701
  22,075
  23,504
  24,991
  26,539
  28,152
  29,832
  31,583
  33,409
  35,315
  37,305
  39,384
  41,555
  43,825
  46,199
  48,682
  51,280
  54,000
  56,848
Operating income, $m
  2,099
  1,814
  2,008
  2,210
  2,422
  2,643
  2,873
  3,112
  3,360
  3,619
  3,887
  4,250
  4,540
  4,842
  5,155
  5,481
  5,821
  6,174
  6,543
  6,927
  7,327
  7,745
  8,182
  8,638
  9,114
  9,612
  10,132
  10,677
  11,247
  11,843
  12,468
EBITDA, $m
  3,025
  2,825
  3,114
  3,416
  3,731
  4,060
  4,402
  4,757
  5,127
  5,512
  5,911
  6,326
  6,758
  7,206
  7,673
  8,158
  8,664
  9,190
  9,738
  10,310
  10,906
  11,528
  12,178
  12,856
  13,565
  14,306
  15,081
  15,892
  16,740
  17,628
  18,557
Interest expense (income), $m
  121
  137
  174
  212
  252
  294
  337
  383
  430
  479
  530
  583
  638
  695
  754
  816
  881
  948
  1,017
  1,090
  1,166
  1,245
  1,327
  1,414
  1,504
  1,598
  1,696
  1,798
  1,906
  2,018
  2,136
Earnings before tax, $m
  2,132
  1,676
  1,834
  1,999
  2,170
  2,349
  2,535
  2,729
  2,930
  3,140
  3,357
  3,668
  3,902
  4,147
  4,401
  4,665
  4,940
  5,227
  5,525
  5,837
  6,161
  6,500
  6,854
  7,224
  7,610
  8,014
  8,437
  8,879
  9,341
  9,825
  10,332
Tax expense, $m
  586
  453
  495
  540
  586
  634
  685
  737
  791
  848
  906
  990
  1,054
  1,120
  1,188
  1,260
  1,334
  1,411
  1,492
  1,576
  1,664
  1,755
  1,851
  1,951
  2,055
  2,164
  2,278
  2,397
  2,522
  2,653
  2,790
Net income, $m
  631
  1,224
  1,339
  1,459
  1,584
  1,715
  1,851
  1,992
  2,139
  2,292
  2,451
  2,677
  2,849
  3,027
  3,212
  3,405
  3,606
  3,815
  4,033
  4,261
  4,498
  4,745
  5,004
  5,274
  5,556
  5,850
  6,159
  6,481
  6,819
  7,172
  7,542

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  1,293
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  18,029
  18,546
  20,441
  22,424
  24,493
  26,650
  28,895
  31,230
  33,658
  36,181
  38,803
  41,528
  44,361
  47,305
  50,368
  53,555
  56,872
  60,327
  63,927
  67,679
  71,594
  75,678
  79,942
  84,396
  89,050
  93,914
  99,001
  104,322
  109,890
  115,718
  121,820
Adjusted assets (=assets-cash), $m
  16,736
  18,546
  20,441
  22,424
  24,493
  26,650
  28,895
  31,230
  33,658
  36,181
  38,803
  41,528
  44,361
  47,305
  50,368
  53,555
  56,872
  60,327
  63,927
  67,679
  71,594
  75,678
  79,942
  84,396
  89,050
  93,914
  99,001
  104,322
  109,890
  115,718
  121,820
Revenue / Adjusted assets
  0.569
  0.569
  0.569
  0.569
  0.569
  0.569
  0.569
  0.569
  0.569
  0.569
  0.569
  0.569
  0.569
  0.569
  0.569
  0.569
  0.569
  0.569
  0.569
  0.569
  0.569
  0.569
  0.569
  0.569
  0.569
  0.569
  0.569
  0.569
  0.569
  0.569
  0.569
Average production assets, $m
  8,950
  9,919
  10,933
  11,994
  13,100
  14,254
  15,455
  16,704
  18,002
  19,352
  20,754
  22,212
  23,727
  25,302
  26,940
  28,644
  30,419
  32,266
  34,192
  36,199
  38,293
  40,477
  42,758
  45,140
  47,629
  50,231
  52,952
  55,798
  58,776
  61,893
  65,157
Working capital, $m
  1,034
  1,150
  1,268
  1,391
  1,519
  1,653
  1,792
  1,937
  2,088
  2,244
  2,407
  2,576
  2,751
  2,934
  3,124
  3,322
  3,527
  3,742
  3,965
  4,198
  4,440
  4,694
  4,958
  5,234
  5,523
  5,825
  6,140
  6,470
  6,815
  7,177
  7,555
Total debt, $m
  5,211
  4,963
  6,057
  7,200
  8,394
  9,639
  10,934
  12,282
  13,683
  15,139
  16,652
  18,224
  19,858
  21,557
  23,324
  25,163
  27,077
  29,071
  31,148
  33,313
  35,572
  37,928
  40,389
  42,959
  45,644
  48,451
  51,386
  54,456
  57,669
  61,031
  64,552
Total liabilities, $m
  10,949
  10,701
  11,795
  12,938
  14,132
  15,377
  16,672
  18,020
  19,421
  20,877
  22,390
  23,962
  25,596
  27,295
  29,062
  30,901
  32,815
  34,809
  36,886
  39,051
  41,310
  43,666
  46,127
  48,697
  51,382
  54,189
  57,124
  60,194
  63,407
  66,769
  70,290
Total equity, $m
  7,080
  7,845
  8,647
  9,485
  10,361
  11,273
  12,223
  13,210
  14,237
  15,305
  16,414
  17,566
  18,765
  20,010
  21,306
  22,654
  24,057
  25,518
  27,041
  28,628
  30,284
  32,012
  33,816
  35,700
  37,668
  39,726
  41,877
  44,128
  46,483
  48,949
  51,530
Total liabilities and equity, $m
  18,029
  18,546
  20,442
  22,423
  24,493
  26,650
  28,895
  31,230
  33,658
  36,182
  38,804
  41,528
  44,361
  47,305
  50,368
  53,555
  56,872
  60,327
  63,927
  67,679
  71,594
  75,678
  79,943
  84,397
  89,050
  93,915
  99,001
  104,322
  109,890
  115,718
  121,820
Debt-to-equity ratio
  0.736
  0.630
  0.700
  0.760
  0.810
  0.860
  0.890
  0.930
  0.960
  0.990
  1.010
  1.040
  1.060
  1.080
  1.090
  1.110
  1.130
  1.140
  1.150
  1.160
  1.170
  1.180
  1.190
  1.200
  1.210
  1.220
  1.230
  1.230
  1.240
  1.250
  1.250
Adjusted equity ratio
  0.402
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  631
  1,224
  1,339
  1,459
  1,584
  1,715
  1,851
  1,992
  2,139
  2,292
  2,451
  2,677
  2,849
  3,027
  3,212
  3,405
  3,606
  3,815
  4,033
  4,261
  4,498
  4,745
  5,004
  5,274
  5,556
  5,850
  6,159
  6,481
  6,819
  7,172
  7,542
Depreciation, amort., depletion, $m
  926
  1,012
  1,106
  1,205
  1,309
  1,417
  1,529
  1,646
  1,767
  1,893
  2,024
  2,076
  2,217
  2,365
  2,518
  2,677
  2,843
  3,016
  3,195
  3,383
  3,579
  3,783
  3,996
  4,219
  4,451
  4,694
  4,949
  5,215
  5,493
  5,784
  6,089
Funds from operations, $m
  2,608
  2,235
  2,445
  2,664
  2,893
  3,132
  3,380
  3,638
  3,906
  4,185
  4,475
  4,753
  5,066
  5,392
  5,730
  6,082
  6,449
  6,831
  7,229
  7,644
  8,077
  8,528
  9,000
  9,492
  10,007
  10,545
  11,108
  11,696
  12,312
  12,957
  13,632
Change in working capital, $m
  -20
  112
  118
  123
  128
  134
  139
  145
  151
  156
  163
  169
  176
  183
  190
  198
  206
  214
  223
  233
  243
  253
  264
  276
  289
  302
  315
  330
  345
  361
  378
Cash from operations, $m
  2,628
  2,123
  2,327
  2,541
  2,765
  2,998
  3,240
  3,493
  3,756
  4,029
  4,312
  4,584
  4,891
  5,209
  5,540
  5,885
  6,243
  6,617
  7,006
  7,411
  7,834
  8,275
  8,735
  9,216
  9,718
  10,243
  10,792
  11,366
  11,967
  12,595
  13,253
Maintenance CAPEX, $m
  0
  -836
  -927
  -1,022
  -1,121
  -1,224
  -1,332
  -1,444
  -1,561
  -1,682
  -1,809
  -1,940
  -2,076
  -2,217
  -2,365
  -2,518
  -2,677
  -2,843
  -3,016
  -3,195
  -3,383
  -3,579
  -3,783
  -3,996
  -4,219
  -4,451
  -4,694
  -4,949
  -5,215
  -5,493
  -5,784
New CAPEX, $m
  -1,056
  -969
  -1,014
  -1,060
  -1,107
  -1,154
  -1,201
  -1,249
  -1,299
  -1,350
  -1,402
  -1,457
  -1,515
  -1,575
  -1,638
  -1,704
  -1,774
  -1,848
  -1,925
  -2,007
  -2,094
  -2,185
  -2,281
  -2,382
  -2,489
  -2,602
  -2,721
  -2,846
  -2,978
  -3,117
  -3,264
Cash from investing activities, $m
  -1,069
  -1,805
  -1,941
  -2,082
  -2,228
  -2,378
  -2,533
  -2,693
  -2,860
  -3,032
  -3,211
  -3,397
  -3,591
  -3,792
  -4,003
  -4,222
  -4,451
  -4,691
  -4,941
  -5,202
  -5,477
  -5,764
  -6,064
  -6,378
  -6,708
  -7,053
  -7,415
  -7,795
  -8,193
  -8,610
  -9,048
Free cash flow, $m
  1,559
  317
  387
  459
  537
  620
  707
  800
  896
  997
  1,101
  1,187
  1,300
  1,417
  1,537
  1,663
  1,792
  1,926
  2,065
  2,208
  2,357
  2,512
  2,672
  2,838
  3,011
  3,190
  3,377
  3,571
  3,774
  3,985
  4,205
Issuance/(repayment) of debt, $m
  331
  1,045
  1,094
  1,144
  1,194
  1,244
  1,295
  1,348
  1,401
  1,456
  1,513
  1,572
  1,634
  1,699
  1,767
  1,839
  1,914
  1,993
  2,077
  2,165
  2,259
  2,357
  2,460
  2,570
  2,685
  2,807
  2,935
  3,070
  3,213
  3,363
  3,521
Issuance/(repurchase) of shares, $m
  141
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  450
  1,045
  1,094
  1,144
  1,194
  1,244
  1,295
  1,348
  1,401
  1,456
  1,513
  1,572
  1,634
  1,699
  1,767
  1,839
  1,914
  1,993
  2,077
  2,165
  2,259
  2,357
  2,460
  2,570
  2,685
  2,807
  2,935
  3,070
  3,213
  3,363
  3,521
Total cash flow (excl. dividends), $m
  2,016
  1,362
  1,480
  1,603
  1,731
  1,864
  2,003
  2,147
  2,297
  2,452
  2,614
  2,759
  2,934
  3,116
  3,305
  3,501
  3,706
  3,919
  4,142
  4,374
  4,616
  4,868
  5,132
  5,408
  5,696
  5,997
  6,312
  6,642
  6,987
  7,348
  7,726
Retained Cash Flow (-), $m
  169
  -765
  -802
  -839
  -875
  -912
  -950
  -988
  -1,027
  -1,067
  -1,109
  -1,153
  -1,198
  -1,246
  -1,296
  -1,348
  -1,403
  -1,461
  -1,523
  -1,587
  -1,656
  -1,728
  -1,804
  -1,884
  -1,968
  -2,058
  -2,152
  -2,251
  -2,355
  -2,465
  -2,581
Prev. year cash balance distribution, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  597
  679
  765
  856
  952
  1,053
  1,159
  1,270
  1,385
  1,505
  1,607
  1,736
  1,870
  2,009
  2,153
  2,303
  2,458
  2,619
  2,786
  2,960
  3,141
  3,328
  3,524
  3,727
  3,939
  4,160
  4,391
  4,631
  4,882
  5,145
Discount rate, %
 
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
 
  573
  621
  665
  705
  738
  764
  783
  794
  796
  789
  763
  741
  711
  674
  632
  585
  535
  482
  429
  376
  325
  276
  231
  190
  153
  121
  94
  72
  53
  39
Current shareholders' claim on cash, %
  100
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

Air Products and Chemicals, Inc., is an industrial gases company. The Company's Industrial Gases business provides atmospheric and process gases and related equipment to manufacturing markets, including refining and petrochemical, metals, electronics, and food and beverage. The Company is also a supplier of liquefied natural gas process technology and equipment. The Company operates through five segments: Industrial Gases-Americas, Industrial Gases-Europe, Middle East, and Africa (EMEA), Industrial Gases-Asia, Industrial Gases-Global, and Corporate and other.

FINANCIAL RATIOS  of  Air Products&Chemicals (APD)

Valuation Ratios
P/E Ratio 53.1
Price to Sales 3.5
Price to Book 4.7
Price to Tangible Book
Price to Cash Flow 12.8
Price to Free Cash Flow 21.3
Growth Rates
Sales Growth Rate -3.7%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -16.6%
Cap. Spend. - 3 Yr. Gr. Rate -7.1%
Financial Strength
Quick Ratio 1
Current Ratio 0.3
LT Debt to Equity 55.2%
Total Debt to Equity 73.6%
Interest Coverage 19
Management Effectiveness
Return On Assets 4.1%
Ret/ On Assets - 3 Yr. Avg. 6%
Return On Total Capital 5%
Ret/ On T. Cap. - 3 Yr. Avg. 7.3%
Return On Equity 8.8%
Return On Equity - 3 Yr. Avg. 13.4%
Asset Turnover 0.5
Profitability Ratios
Gross Margin 32.8%
Gross Margin - 3 Yr. Avg. 29.9%
EBITDA Margin 33.4%
EBITDA Margin - 3 Yr. Avg. 28.3%
Operating Margin 22%
Oper. Margin - 3 Yr. Avg. 17.3%
Pre-Tax Margin 22.4%
Pre-Tax Margin - 3 Yr. Avg. 17.7%
Net Profit Margin 6.6%
Net Profit Margin - 3 Yr. Avg. 9.7%
Effective Tax Rate 27.5%
Eff/ Tax Rate - 3 Yr. Avg. 26.2%
Payout Ratio 114.3%

APD stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the APD stock intrinsic value calculation we used $9524 million for the last fiscal year's total revenue generated by Air Products&Chemicals. The default revenue input number comes from 2016 income statement of Air Products&Chemicals. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our APD stock valuation model: a) initial revenue growth rate of 10.8% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.3%, whose default value for APD is calculated based on our internal credit rating of Air Products&Chemicals, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Air Products&Chemicals.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of APD stock the variable cost ratio is equal to 82.9%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for APD stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 3.5% for Air Products&Chemicals.

Corporate tax rate of 27% is the nominal tax rate for Air Products&Chemicals. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the APD stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for APD are equal to 94%.

Life of production assets of 10.7 years is the average useful life of capital assets used in Air Products&Chemicals operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for APD is equal to 10.9%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $7080 million for Air Products&Chemicals - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 217.935 million for Air Products&Chemicals is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Air Products&Chemicals at the current share price and the inputted number of shares is $33.6 billion.

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COMPANY NEWS

▶ Air Products and Chemicals Extends Its Contract with Barrick   [Oct-16-17 10:05AM  Market Realist]
▶ Air Products Celebrates National Manufacturing Day(SM)   [Oct-06-17 11:45AM  PR Newswire]
▶ Air Products & Chemicals to Supply Gas in South Korea   [Sep-25-17 01:06PM  Market Realist]
▶ Air Products and Chemicals Stock Could More in 2017   [Sep-22-17 09:08AM  Market Realist]
▶ Analysts Recommendations for Air Products and Chemicals   [Sep-21-17 02:07PM  Market Realist]
▶ How Safe Is Air Products & Chemicals' Dividend?   [Sep-09-17 03:16PM  Motley Fool]
▶ Top Ranked Income Stocks to Buy for August 30th   [Aug-30-17 09:06AM  Zacks]
▶ Transformative Industrial Gas Merger Takes Shape   [Aug-25-17 07:00AM  Morningstar]
▶ Dividend Yield of Air Products & Chemicals   [Aug-23-17 12:42PM  Market Realist]
▶ Top Ranked Income Stocks to Buy for August 18th   [Aug-18-17 09:53AM  Zacks]
▶ Air Products and Chemicals Strengthens Its Gas Supply   [Aug-14-17 05:05PM  Market Realist]
▶ Air Products & Chemicals: Analysts Recommendations   [Aug-07-17 10:37AM  Market Realist]
Financial statements of APD
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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